Increased deficit financing,following the use of expansionary fiscal policy by the U.S. ,will raise U.S.interest rates and causes the dollar to appreciate.

Question

Quizplus · Accepted Answer

When the government uses expansionary fiscal policy, it increases the deficit financing which will lead to an increase in demand for borrowing. This increased demand will cause a rise in interest rates, causing the dollar to appreciate.

Increased Deficit Financing,following the Use of Expansionary Fiscal Policy by the U.S